TOPSHOP BUSINESS

Boots Business

Boots Business

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The growing recognition of the significance of global mindset has led to the proliferation of different and conflicting definitions and perspectives in the literature. Therefore, there is still confusion about what global mind-set is (Lovins, 2009).

In order to identify the properties of a specific type of mind-set such as a global mind-set, researchers often first outline the main dimensions of the environment that this specific mind-set confronts. In the case of global mind-set, the majority of writers consider global mind-set in relation to the global environment, particularly, in relation to two salient dimensions of this environment: strategic complexity and/or national and cultural diversity (Logan, 2007).

The entry strategy of companies typically follows one of two alternative patterns. Under the 'waterfall' scenario, the product or service is gradually moved into overseas markets, while in the 'sprinkler' mode the product is introduced into several countries' markets simultaneously or within a limited period of time (Riesenbeck & Freeling, 1991).

Traditionally, the waterfall strategy was the preferred choice. It goes well with the cultural distance and learning patterns already discussed. After success in the home market, the product is gradually moved out to culturally close country markets, then to other mature and high growth markets, and finally to less-developed country markets. This is the pattern followed by many well-known companies, including Matsushita, BMW, and General Electric.

The advantage of the waterfall strategy is that the expansion can take place in an orderly manner, and the same managers can be used for different countries, which helps to capitalise on skills developed (Kalish et al., 1995). For the same reasons it is also a relatively less-demanding strategy in terms of resource requirements. This is why it still is the most common approach for newer companies such as Dell, Benetton, and The Body Shop. But in fast moving markets the waterfall strategy may be too slow.

Compared with the waterfall, the sprinkler strategy has the opposite strengths and disadvantages. It is a much quicker way to product introduction across the globe, it generates first-mover advantage, and it pre-empts competitive countermoves by sheer speed. The sprinkler strategy is a good strategy in hypercompetition and time-based competition. The drawback is the amount of managerial, financial, and other resources required, and the risk potential of major commitments without proper country knowledge or research.

Examples of the sprinkler approach are becoming more frequent as the competitive climate heats up and as global communications such as the Internet make access to country markets easier. The typical cases involve new product launches by companies with an established global presence such as Sony (the handheld camcorder, for example, and the Walkman), Microsoft (Windows 95, 98 and Me), and Gillette (the Sensor, for example).

Today the sprinkler strategy is also used by domestic companies to establish a global presence. Even though not 'Born Globals' (see below), these firms first solidify their home market success and then expand across the globe quickly. For example, catalog-based retailers such as Land's End, Eddie Bauer, and ...